SUPERVALU Inc. (NYSE: SVU) soon will be acquired. If not, it is at least looking like the troubled grocery store chain operator is back in play. SUPERVALU has been in the buyout rounds before today, so we would treat this as an ongoing continuation of the rumor mill.
Cerberus was considered a potential acquirer of the Albertsons grocery chain from SUPERVALU. What remains unknown is whether the buyout will be for the entire company or just for the Albertsons chain. Initial reports suggested that a deal for the entire company would be likely, but now its interest seems to be tied to just the Albertsons chain, according to the Wall Street Journal.
Another unknown issue is what price the deal would come to. The market cap is only $508 million, based on the $2.38 close on Friday, and shares have traded in 52-week range of $1.68 to $8.57. Shares are currently trading up about 13% around $2.70 this morning on the news.
While this is a small market value at barely $500 million, the real trick is navigating the debt, as SUPERVALU has more than $6 billion in direct long-term debt on its balance sheet. As a reminder, this potential buyout story started making the rounds back in August, and shares are not grossly different now compared to then.
JON C. OGG